President Trump’s Plan to Reduce Medicare Drug Costs

Labeling Medicare a “rigged system,” President Trump has outlined a plan that he believes would allow it to lower drug prices covered under its Part B coverage. Specifically, the proposal would permit Medicare to implement a new reimbursement scheme that would reduce drug prices to achieve parity with costs in other nations. The Department of Health and Human Services estimates the plan would result in a savings of $17 billion over five years. It is anticipated that a pilot program to implement the plan would take effect in the year 2020.

President Trump has often criticized the current Medicare Part B plan, claiming that “other countries have rigged the system,” which has resulted in “Americans pay[ing] more so that other countries can pay less.” President Trump believes the plan will end what he calls “global freeloading.” In support of that position, HHS Secretary Alex Azar has released a report stating that the United States pays 1.8 to 4 times as much for drugs covered under Medicare Part B than other nations. If the Trump administration moves forward with the President’s sweeping proposal, it would first implement a pilot program to be phased in over five years and apply to 50% of the American population.

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